Equifax 2007 Annual Report Download - page 49

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EQUIFAX | 2007 ANNUAL REPORT 47
Effect if actual results differ from assumptions. We do not believe
there is a reasonable likelihood that there will be a material change
in the future estimates or assumptions that are used in our actuarial
valuations. However, if actual results are not consistent with our
estimates or assumptions, we may be exposed to changes in pension
expense that could be material. Adjusting our expected long-term
rate of return (8.00% at December 31, 2007) by 0.5% would have
changed our estimated pension expense in 2007 by approximately
$2.7 million. Adjusting our weighted-average discount rate (5.86%
at December 31, 2007) by 0.5% would have changed our estimated
pension expense in 2007 by approximately $2.6 million.
Stock-Based Compensation
We have stock-based compensation plans which provide that
qualifi ed and non-qualifi ed stock options and nonvested stock
may be granted to offi cers and other employees. In accordance
with SFAS 123R we recognize the cost of share-based payment
transactions over the requisite service period. That cost is measured
based on the fair value of the equity instruments issued.
We use the binomial model to calculate the fair value of stock
options granted on or after January 1, 2006. The fair value of options
granted prior to 2006 was determined using the Black-Scholes
model. Nonvested stock is valued based on the fair market value
of our common stock on the date of grant, reduced for expected
dividends during the requisite service period. We reassess all
assumptions used in calculating fair value each grant date.
Judgments and uncertainties. The fair value of our stock options is
calculated using the binomial model which incorporates assumptions
regarding anticipated employee exercise behavior, expected stock
price volatility, dividend yield and risk-free interest rate. The fair
value of nonvested stock is based on the fair market value of our
common stock on the date of grant. However, since our nonvested
stock does not pay dividends during the vesting period, the fair
value on the date of grant is reduced by the present value of the
expected dividends over the requisite service period. SFAS 123R
requires us to estimate forfeitures at the grant date. Accordingly,
compensation cost is recognized based on the number of awards
expected to vest. There may be adjustments in future periods if
actual forfeitures differ from our estimates.
Effect if actual results differ from assumptions. We do not believe
there is a reasonable likelihood that there will be a material change
in the future estimates or assumptions we use to determine stock-
based compensation expense. However, if actual results are not
consistent with our estimates or assumptions, we may be exposed
to changes in stock-based compensation that could be material. A
10% change in our stock-based compensation expense for the year
ended December 31, 2007, would have reduced our net income
by approximately $1.8 million.